Published 4:00 am, Monday, January 24, 2000

A San Francisco health clinic that treats hundreds of HIV patients might have to close by the end of the month because of a dispute with Medicare.

As many as 1,500 chronically ill patients - 500 of them with HIV - could be scrambling for doctors next month if the Wellness Center at the Davies medical campus folds.

The two-year-old clinic has been a labor of love for Dr. Jon Kaiser and a staff of 15, who combine conventional medicine with diets, vitamin and mineral supplements, stress reduction, acupuncture and massage. He has written two popular books on HIV care and has one of the largest private HIV-patient practices in The City.

But a series of events kicked off by a change in ownership two years ago has culminated in a demand from Medicare that the clinic repay $126,000 in what it says are past overcharges.

It's a scene that has been repeated all over the country, with doctors and hospitals howling over aggressive auditing by Medicare. The agency has demanded hundreds of millions in repayments based on reviews that revealed physicians failed to document patient visits in accordance with its regulations.

Already, the managed care market in the Bay Area - considered the stingiest in the nation - has wreaked havoc with private-practice doctors, pushing several with AIDS practices out of business because the high-cost care is not adequately reimbursed.

While Kaiser appeals, he is required to pay the entire amount or his Medicare payments will be halted Jan. 31. Most disabled HIV patients are on Medicare and it accounts for half the Wellness Center's income, Kaiser said.

Payments not enough

With the clinic $325,000 in debt and his credit maxed out, Kaiser said he can afford to make only $1,000-per-month payments toward the disputed amount - nowhere near enough to satisfy federal officials.

He has written long, impassioned letters, sent stacks of documentation and enlisted politicians. So far, nothing seems to have worked.

His patients are up in arms.

"I'm trembling," Martin Devin, an HIV-positive patient, said shortly after learning of the impending closure. "I feel like it's a threat to my life. I've been positive for 20 years and following Jon's suggested program for the majority of that time. The only reason I'm alive is because I have his guidance and direction."

Several patients said Kaiser's sparing and careful use of HIV medications along with other therapies has kept them healthy and out of the hospital, saving Medicare and other insurers money in the process. It's also led to a much lower rate of resistance to HIV drugs.

"I go to a weekly support group for people with AIDS and with the exception of me and one other person who is also a patient of Jon's, everyone there has exhausted every medication there is," said Michael Daugherty, a patient for more than 11 years.

Some are angry that such a relatively small amount of money could spell the end of a clinic that has enjoyed so much success.

"They are worried about $125,000?" asked John, 40, who didn't want to give his last name. He credits Kaiser with his robust health after 13 years with HIV. "That's like a millionth of a second of taxes in our country!"

But a three-year payment schedule is as far as the agency can go, said Richard Chambers, HCFA's deputy regional administrator.

Even that requires Kaiser to document loan rejections from two banks, fill out a 10-page form and supply two years of tax records, among other materials, by Jan. 31.

To go beyond three years, Chambers said, is "highly, highly unusual," and he could cite no examples.

Even that schedule is far more than the deeply indebted Kaiser can take on. When the agency agrees to stretch payments, it charges a federally mandated 13.375 percent interest rate.

Pelosi said she is sympathetic,

and concerned about what will happen to the 1,500 patients with complex medical conditions who will suddenly be left without their doctor.

The Jan. 31 deadline does reflect two extra weeks the agency gave Kaiser to pay or agree to a short-term payment schedule. They also are seeking to speed his appeal, but further compromise doesn't appear likely.

"We're reaching out in every possible way we can to make HCFA aware of the consequences for patients," Pelosi said. But, she acknowledged, "HCFA doesn't have a great deal of discretion."

Sale to Quest Corp.

The problem began four years ago when the medical group Kaiser belonged to, led by pioneering AIDS doctor Marcus Conant, was sold to the Quest Corp., an out-of-state company that was buying AIDS practices all over the country.

The company instituted its own billing practices, but in the end failed to make the endeavor work. One day in 1998 it gave the center 48 hours' notice of its closing, cut off the phones and hauled away furniture, equipment and 2,000 medical charts, Kaiser said.

Kaiser and some staff scrambled to try to salvage a practice for the patients he had been seeing, using cell phones, and portable massage tables to examine patients, and keeping chart records on sheets of blank paper.

The Davies Medical Center administration helped by negotiating a lease and co-signing for a $100,000 bank loan.

Kaiser had to immediately create a corporate structure, negotiate contracts with insurance companies and acquire equipment and supplies - at the same time he and the clinic were seeing 50 patients daily.

"It was like working on the front lines of a war zone," he said.

Not long after, Kaiser said, he got a call from Quest saying it needed to see patient charts because Medicare was auditing its books.

That raised his concern, so he decided to launch an internal audit to make sure the clinic was following correct procedures.

As it turned out, the clinic needed to change the way it document

ed patient visits and, Kaiser said, it began making the changes before Medicare knocked on the door.

Using a formula, the insurance company extrapolated from the sample that the Wellness Center owed $138,000. The auditor sent preliminary findings to Kaiser in August, and he sent back 100 pages of documentation and a 10-page cover letter.

"I sent them financial statements showing we lost $200,000 this year, I sent them the second mortgage I took out on my house, which is 100 percent maxed out, I sent them the promissory note from my parents for $50,000 - that's how extended I am to continue this practice," Kaiser said. "I'm not stupid. We have been making good progress toward breaking even and we are just about at that point."

On Dec. 15, he said, he received a letter from the insurance company telling him the final audit amount was $126,913 and he had until Jan. 7 to pay. If not, his Medicare payments would halt Jan. 14.

Kaiser - and his patients - insist that he has acted in good faith and that National Heritage Insurance Co. and HCFA have consistently refused to acknowledge his situation.

"This is not an endeavor I took on to make money. This was to prevent the abrupt discontinuation of care for many seriously ill people," Kaiser said. "We had already, unilaterally, without any prodding, embarked on our own internal review and had just finished making all of these changes."

Kaiser said he and the two other doctors at the center earn about $85,000, far less than most San Francisco physicians.

And the nurse practitioners on staff who elsewhere would make $80,000, earn just $55,000 but are committed to spending more time with patients and customizing treatments.

Besides HIV, the Wellness Center also sees people with cancer, chronic pain and autoimmune diseases.

Kaiser is appealing the audit, but the first judge of the case is an employee of National Heritage Insurance Co., where he doesn't expect to get much sympathy. There are several other appeals levels after that, but they can drag on for months and years.

He wants the agency to grant him a one-year grace period to cover the chaotic founding of the practice and instead audit his books beginning last year, after the changes were put in place. But he has gotten nowhere with the request.

Sympathy for dilemma

Conant, his former colleague, is sympathetic. He sold the practice in 1996 because it was losing $10,000 a month. That's because while AIDS patients require intensive management and counseling, reimbursement for their visits is the same as someone who comes in with acne, he said.

Conant has had his own experiences with Medicare. After Quest abandoned the practice, auditors wrote him that they wanted to see the charts of 22

patients.

Conant responded that they were no longer his patients, he didn't have the records and they should seek them from their current doctors.

The response was a bill for $42,000 - representing all the charges he submitted for those patients during the audit period, when Conant was their physician. He was able to round up some of the records, and sent them off. The agency wrote back saying he now owed them $22,000.

It took one of his staff members a week to go to offices throughout The City and search through boxes to come up with the remaining charts, which finally satisfied the auditors.

Unlike ordinary business disputes that are worked out with lawyers from the two sides or, eventually, in court, Medicare gets its money up front, before doctors can appeal the findings.

"Medicare works like the IRS. They walk in and review the records and say this is not in keeping with our rules and you are guilty of fraud and abuse and you owe us this much money," Conant said. "That's the unfortunate situation Dr. Kaiser is in.

"And you wonder why doctors

are quitting."

Indeed, Pete, another one of Kaiser's patients, came to him seven months ago after his longtime AIDS doctor shut her practice suddenly because she couldn't make ends meet.

"It's absolutely appalling that we're losing the finest physicians you could possibly have," said Pete, who didn't want his full name used. "They have integrity. They don't care about money. . . . Six months ago my viral load was half a million. Now it's zero because of Dr. Kaiser."

Now Playing:

Kaiser will hold a patient meeting and press conference Wednesday at noon at the Metropolitan Community Church, 150 Eureka St., to discuss the situation. Already, several patients are talking about trying to raise money to keep the center open.

Kaiser said he doesn't feel ethical asking patients for money, but will cooperate in any efforts they choose to make. &lt;

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